Professional Documents
Culture Documents
1 RACHEL KREVANS (CA SBN 116421) DAVID D. SCANNELL (pro hac vice)
RKrevans@mofo.com DScannell@mofo.com
2 WESLEY E. OVERSON (CA SBN 154737) MORRISON & FOERSTER LLP
WOverson@mofo.com 2000 Pennsylvania Ave., NW
3 MATTHEW A. CHIVVIS (CA SBN 251325) Washington, DC 20006
MChivvis@mofo.com Telephone: 202.887.1500
4 JACOB P. EWERDT (CA SBN 313732) Facsimile: 202.887.0763
JEwerdt@mofo.com
5 MORRISON & FOERSTER LLP
425 Market Street
6 San Francisco, California 94105-2482
Telephone: 415.268.7000
7 Facsimile: 415.268.7522
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1 I. FACTUAL BACKGROUND
3 Most of the strawberries sold in the U.S. were developed at UCs Strawberry Breeding
4 Program, which is now centered at UCs Davis campus. Although UC derives royalties from the
5 Program, its core aim is not to make money. The goal is to advance better strawberry varieties
6 for CA growers, with benefits felt worldwide. The Program began in the 1930s, and was
7 substantially expanded from the 1950s to the 1980s by two seminal scientist-breeders: Dr. Royce
8 Bringhurst and Mr. Victor Voth. (Ex. 1 at 79:11-17.) It was then that UC varieties came to
9 dominate the California and global strawberry industry. (Id.) In the late 1980s, Dr. Bringhurst
10 and Mr. Voth indicated they would soon be retiring, and UC began searching for a replacement.
11 (Id. at 16:8-17:1.)
12 Dr. Shaw was hired in 1986, and assumed direction of the Program in 1990; Dr. Larson
13 was hired in 1991. (Id. at 17:2-4; ECF No. 145-6 at 15:19-23.) As with previous faculty
14 breeders, UC paid them salaries and a large portion (together, ~30%) of royalties generated from
15 any new strawberry varieties they invented that were patented and released. (Ex. 1 at 22:20-24;
16 Complaint Exs. 1, 2.) To develop new varieties, they used strawberry breeding stock first
17 developed by previous generations of UC strawberry breeders, such as Dr. Bringhurst and Mr.
18 Voth. (Ex. 1 at 17:17-18:19.) Drs. Shaw and Larson could not have developed the varieties they
19 developed without this material. Drs. Shaw and Larson made millions from Program royalties,
20 but Dr. Shaw, in particular, did not feel he was wealthy and was tired of reporting to the College
23 Drs. Shaw and Larson had been granted the privilege and immense responsibility of
24 developing and protecting the Program, a crown jewel of UCs Davis campus. Yet they tried
25 their best to end the Program at UC, so they could take it private and make a for-profit business
26 out of it for their own benefit. In 2011, Drs. Shaw and Larson started spreading the word that the
27 Program would end when they retired. (ECF No. 160-16 at CBC00002073, 2079.) They violated
28 their duties to UC by telling its biggest customers and partners in the industry that the Program
1 was failing and that these companies needed join their private venture (that became CBC), or be
2 shut out of new varieties. They tried to force UC to license to them on their terms. They revoked
3 a Program funding mechanism in 2012 with an aim to cripple the Program (ECF No. 157-19),
4 kept the data on their breeding work in 2012 a secret (Ex. 1 at 193:6-194:22), destroyed all their
5 breeding work at UC from 2013 (id. at 48:5-21), and did no breeding work for UC in 2014 (id. at
6 45:3-7). This created a substantial gap in the Programs breeding pipeline. (Id. at 49:16-50:1.)
7 At the same time, Drs. Shaw and Larson encouraged two faculty friends in their
8 department to support a private spinoff and to give that spinoff the most valuable breeding stock
9 in the Program the 180 varieties referred to as the CSG. As Dr. Shaw knew, UC has never
10 had a policy of releasing its germplasm for general breeding purposes. (Id. at 108:14-110:21.)
11 Nevertheless, together with these two colleagues, Drs. Shaw and Larson prepared a
12 recommendation to the Dean of the College of Agriculture, who had final say on the matter, to
13 release the CSG to Strawberry, Inc. They had earlier disclosed this same germplasm as a
14 patentable invention, and the recommendation rejected the use of plant patents to protect the
15 germplasm, against the advice of the Universitys technology transfer office. (Ex. 2 at 217:19-
16 219:5, 219:22-220:16.) Instead, the recommendation proposed releasing all 180 varieties at once,
17 making the unpatented, tangible property of the plants available to those outside UC, and
18 protecting this property solely through Tangible Research Product, or TRP, contracts all
19 proposals that were without precedent for strawberry variety releases. (Id. at 180:22-181:15,
20 227:14-25.)
1 she explained [p]lant patents provide the best possible protection of UC plant intellectual
2 property and we are considering such options. (Id.; Ex. 2 at 219:6-21.) At the time, the Deans
3 decision still contemplated that licenses of the Core Strawberry Germplasm to private companies
4 might be possible. But she made clear that UCs intention was to continue the public breeding
6 In early 2014, Drs. Shaw and Larson revealed that they would be retiring by the end of the
7 year. After receiving this information, UC quickly sought to replace them with a new breeder,
8 conducting a nation-wide search that ultimately resulted in the hiring of a highly regarded
9 geneticist and plant breeder, Dr. Steven Knapp. (ECF No. 144-12; Ex. 3.)
10 In mid-2014, UC decided to proceed with patenting the CSG, which had been disclosed as
11 an invention six months earlier. There were two main reasons for this decision: 1) to protect
12 UCs rights in this germplasm in the event UC decided to license any of it for breeding purposes,
13 and 2) to provide record notice to third parties of UCs equitable interest in this germplasm. (Ex.
14 2 at 180:22-183:14; ECF No. 158-20.) UC appropriately deemed the varieties within the CSG
15 patentable, as each is a distinct and new variety of plant. 35 U.S.C. 161. For efficiency, UC
16 filed a single, initial application on all such varieties, although it was aware that continuation
17 patent applications would be needed to pursue each of the included varieties to patent issuance, as
18 has already happened for the Cabrillo variety. (Ex. 2 at 165:20-166:11.) UC requested
19 assignments from Drs. Shaw and Larson, which they were contractually obligated to provide, but
20 they refused in breach of their employment agreements. (ECF No. 240 at 2.)
21 Drs. Shaw and Larson soon made clear that they did not intend for their private breeding
22 company to cooperate with UC; rather, they intended to compete directly with UC. (Ex. 1 at
23 57:4-14.) This affected license negotiations, and UC ultimately suspended any consideration of
24 breeding licenses. UCs focus then turned to proceeding with the patenting process, with the
25 information it had available. Drs. Shaw and Larson provided further information on one variety
26 before their retirement: Cabrillo. (Ex. 2 at 176:15-21, 38:13-16.) That variety has since been
27 patented in a follow-on application from the group application, and released. (Id.; Ex. 4.) UC
28 requested that Dr. Shaw provide all data relating to the Program, and to the CSG in particular, so
1 that additional varieties could be identified for commercial release and individual follow-on
3 Dr. Knapp was selected as the new director shortly before Drs. Shaw and Larson retired in
4 November 2014, and started working in February 2015. When they retired, they took all Program
5 documentation with them, including all pedigree and performance data. (Ex. 1 at 192:25-194:22.)
6 This left Dr. Knapp and those responsible for patenting without key information on the Program
7 germplasm. (Ex. 5.) In 2015, Dr. Knapp directly asked Dr. Shaw for the information (id.), but he
8 again refused to provide it. Dr. Knapps team has had to spend substantial money and time to
9 recreate that data, and many aspects of the Program have been delayed due to the missing data.
10 Dr. Knapp has been working to develop the TCs, and has maintained and advanced the CSG.
11 Aided by DNA genotyping analysis, Dr. Knapp has now generated sufficient information to
12 identify several varieties from the CSG for further patent prosecution and potential commercial
16 begun implementing a Plan B. (Ex. 1 at 58:15-59:14.) Had they wanted to start a breeding
17 business with varieties not owned by UC, that would have been fine, but that is not what they did.
18 Instead, Drs. Shaw and Larson orchestrated a secret business plan for their new company, CBC,
20 While still employed by UC, Drs. Shaw and Larson began arranging for UC varieties that
21 were not yet publicly available to be sent to Spain under UC Test Agreements with
22 EuroSemillas. (ECF No. 158-1; ECF No. 160-45.) Then, Dr. Shaws contact at EuroSemillas in
23 Spain, Javier Cano, obtained possession of these varieties from EuroSemillas and cross bred them
24 to provide CBC with a set of germplasm to start a breeding program that ostensibly was CBCs
25 own work, but was in fact derived from UC germplasm. Dr. Shaw directed Dr. Larson to go to
26 Spain to supervise the crosses. (ECF No. 196-19.) Mr. Cano then had the seeds resulting from
27 the crossbreeding harvested, and sent the seeds to the U.S. for CBCs use. (ECF No. 196-18.) To
28 obscure that his work was on CBCs behalf, Mr. Cano carried it out using sham contracts under
1 the name of a shell company, International Semillas, which has no independent assets, and
2 renamed the plants involved to disguise the use of UC germplasm as parent plants. (Ex. 8 at
3 77:11-78:20, 81:8-10; ECF No. 196-20 at CBC00000914.) The plan was for CBC to take UCs
1 use of them by CBC and Drs. Shaw and Larson, or others at their direction and for their benefit,
2 constitutes conversion.
3 UCs expert, Dr. Stephen Dellaporta, is a geneticist and plant breeder at Yale University.
4 Using DNA genotyping information, he performed a genetic analysis that conclusively shows
5 which UC varieties were used to breed which progeny in CBCs possession. He performed this
6 analysis blind to avoid any biases. His analysis shows that CBC used 22 unreleased CSG
7 varieties and 2 unreleased TCs in crossbreeding in 2014, per a plan Drs. Shaw and Larson
8 directed while still at UC. In what cannot be a coincidence, a communication from Dr. Shaw to
9 Mr. Cano, also while Dr. Shaw was employed by UC, lists the same varieties Dr. Dellaporta
10 identified in a blind setting and proposes using them in crossbreeding in 2014 for CBCs private
11 breeding program.
12 In addition, Dr. Shaw took critical data from UCs Program and refuses to provide even a
13 copy to UC. The Court has already found breach of contract for Dr. Shaws refusal to provide
14 further information on the CSG despite his obligation to do so under his Patent Agreement. Drs.
15 Shaw and Larson also withheld critical data on the remaining germplasm in the Program,
17 Last, CBC admits it was in possession of property taken from UC when Drs. Shaw and
18 Larson retired, such as an all-terrain vehicle, a bed shaper, piping and greenhouse materials, and
20 2. Patent Infringement
21 The Court has already found that importation of seeds from UCs patented varieties would
22 be infringement because seeds are a part of the patented plant. CBC and Drs. Shaw and Larson
23 admit that they directed the use of certain UC patented varieties for breeding in Spain, but claim
24 not to know which varieties were used to generate the seeds that were imported. They claim only
25 International Semillas would know. Using the DNA evidence and spreadsheets produced by
26 CBC, however, UC can show from which UC patented varieties the seeds came in the majority of
27 cases, thus showing which patents were infringed. In the remaining cases where at least one UC
28 patented variety was used in breeding, and where CBCs refusal to provide complete breeding
1 pedigrees prevents UC from identifying the female parent, the jury should be permitted to infer
2 that the UC patented variety was the variety from which the seeds were harvested. Additionally,
3 CBC and Drs. Shaw and Larson have been found to infringe by benchmarking in the U.S. with
4 UC patented varieties. They benchmarked so they could make sure the strawberry varieties they
5 were breeding using UC varieties as parents had traits at least as valuable to growers as the
6 released UC varieties.
9 business relationships, and that Drs. Shaw and Larson breached their duty of loyalty and fiduciary
10 duty to UC. Drs. Shaw and Larson started and obtained an ownership interest in CBC, a
11 company in direct competition with UC, while still employed with UC. They supplied UC-
12 owned germplasm, materials, and resources to EuroSemillas, which were then provided to CBC,
13 all while they were still employed by UC. They directed breeding in Spain by a EuroSemillas
14 affiliate, International Semillas, using UC germplasm, so that the resulting seeds containing UC
15 genetic traits could be sent to CBC in the U.S., while they were still employed by UC. CBC and
16 Drs. Shaw and Larson also interfered with contracts and relationships between UC and its
17 licensees, including its nursery licensees (in California) and EuroSemillas (its most significant
18 licensee outside the U.S. by royalties generated). This, too, occurred while Drs. Shaw and Larson
19 were still employed by UC and thereafter. Together, CBC members and their affiliates comprise
20 more than 80% of the market for UC varieties. For none of these actions did Drs. Shaw and
21 Larson have UCs best interest in mind; rather, they did these things for their own personal gain.
22 B. CBCs Claims
23 CBCs sole remaining claim is for breach of the implied covenant of good faith and fair
24 dealing with regard to UCs decision to file patent applications on and to seek assignment of the
25 CSG. UC filed this application in good faith after Drs. Shaw and Larson disclosed this large set
26 of varieties as an invention an unprecedented action by the breeders and owns the tangible
27 rights in this germplasm in any event. Any damages flowing from this claim would be nominal at
28 best.
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By: /s/ Matthew A. Chivvis
6 MATTHEW A. CHIVVIS
7 Attorneys for Plaintiff and Cross-
Defendant
8 THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA
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22 Defendants.
1 I. INTRODUCTION
2 Strawberry growers and developers joined together to form CBC because Californias
3 multi-billion dollar strawberry industry needs help like never before. This dispute arose after UC
4 leaders, under pressure from California Strawberry Commission and driven by powerful farming
5 conglomerates, rejected the advice of UCs own experts and agreed to effectively shut down the
6 traditional breeding program that had generated millions of dollars in revenue for California. UC
7 filed a bogus patent application solely to divest Drs. Shaw and Larson of their ownership of
8 hundreds of potentially valuable strawberry varieties, destroyed hundreds of other varieties that
9 UC demanded that Shaw and Larson physically transfer to UC, and since has not released a single
10 new cultivar (other than one developed by Shaw and Larson before they retired). As a result, the
11 once-leading UC Davis strawberry breeding program has been set back for years, if not forever.
12 UC postures as the aggrieved victim of theft of its valuable property (the new
13 strawberry varieties invented by Shaw and Larson). Not so. UC has always had the plants. It
14 never lost a license or opportunity because of CBCs efforts to continue Shaws and Larsons
15 work. And, despite its complaints about inadequate information, UC was able to apply for its still
16 un-issued omnibus patent on the CSG, a patent it pursued in bad faith solely to assert ownership
17 over Shaws and Larsons inventions, and to force them to transfer their copies of those plants to
18 UC on the false representation that UC owned the IP rights to the plants.
19 That is what this case is really about the consequences to Californias strawberry
20 industry and the damages to Shaw, Larson and CBC from UCs politically motivated campaign to
21 take what it could not develop itself and to lock up Shaws and Larsons inventions to quash any
22 competition with the interests represented by the CSC. The Court has already determined from
23 the limited record at summary judgment that there is evidence UC acted in bad faith, and there
24 will be much more evidence of that at trial.
25 CBC, Shaw and Larson take the opportunity of this Trial Brief to briefly explain to the
26 Court what really happened leading up to this lawsuit. They also draw the Courts attention to a
27 key issue, ownership of IP rights in Transition Cultivars, the resolution of which will allow the
28 parties to focus their jury presentation on the real dispute.
CBC, SHAW & LARSONS TRIAL BRIEF
Case No. 3:16-CV-02477-VC
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1 Berry Cultivars, LLC, or CBC, had worked with Shaw for years. Shaw and Larson were
2 famous for articles, presentations and posting trial data on strawberry varieties on the UC Davis
3 website. They held field days, where growers and nurseries from around California and the
4 world could see what was happening in the fields and anticipate new strawberry varieties to plant.
5 These growers got to know Shaw and Larson, trusted them, and formed CBC to keep the breeding
6 program moving forward.
7 UCs Bad Faith Negotiations - When it was clear Shaw and Larson were leaving, UC
8 started talking even more loudly about ending the program. It fired (then rehired, but then re-
9 fired) most of the workers. Shaw and the growers involved in CBC were disappointed by UCs
10 mishandling of the strawberry breeding program, and worked for a long time to try to negotiate a
11 win-win, an arrangement where Shaw and CBC could keep pushing forward Shaws highly
12 successful program, paying UC royalties as CBC was able to release cultivars.
13 Many at UC were very interested in this plan. Shaw had for years discussed such options
14 with UC Davis leaders, including deans and other leaders relating to the breeding program. There
15 was general support for this public-private partnership, and UCs own Plant Sciences Department
16 recommended the UC move forward as proposed by Shaw and CBC.
17 UC ultimately reached a different decision and refused to negotiate further. The
18 surprising decision was the result of an agreement with the California Strawberry Commission
19 (CSC) that restricted the breeding program. The public agreement resulted from a settlement of
20 a lawsuit CSC filed, urged by larger strawberry growers who had their own, proprietary
21 breeding programs. Those growers did not want competition from Shaw at UC, or at CBC after
22 his retirement. UC gave the CSC input into future UC licensing activities, a startling departure
23 from academic independence and openness that had characterized the program under Shaw.
24 This agreement was intended directly to keep Shaw (and CBC) from continuing
25 strawberry development. It worked CBC is tied up by UCs claims and the new UC Davis
26 program has not released a single new cultivar.
27 But that was not the whole story. UC had actually reached two agreements with CSC, one
28 public, and one not. The other, and secret, agreement was that UC would not license Shaw (and
CBC, SHAW & LARSONS TRIAL BRIEF
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1 others), while CSC and UC were negotiating the settlement that gave CSC some control over the
2 breeding program. See Exhibit A, Tx. 796. The Commission was explicit it opposed the
3 University from entering into a license agreement with Dr. Shaw. So UC and the Commission
4 entered into a secret agreement not to undertake any licensing during the very time when UC was
5 supposed to be giving, fair consideration to its own Plant Sciences Departments recommendation
6 to license Shaw and CBC, generating royalties for UC.
7 In a decision without precedent, UC reversed course, rejected the recommendation of its
8 own experts in the field, and pursued the filing of an unsupported, improper omnibus patent
9 application to wrest rights from Shaw and Larson (and ultimately CBC). During all the
10 negotiations, after all the communications and emails, no one at UC revealed that UC had already
11 secretly agreed not to license Shaw or anyone associated with him. UCs participation in the
12 negotiations was a sham.1
13 UCs Bad Faith Patent Application The new Dean broke the news that the UC would
14 not deal with its most successful strawberry breeder. In that connection, the Dean also demanded
15 that Shaw and Larson assign their rights to the 168 varieties of plants they had invented, the
16 Core Strawberry Germplasm, or CSG, and authorized the omnibus filing of a single patent
17 application for all 168 varieties. Both the demand and the filing of the CSG patent application
18 were radical departures from years of UC practice.
19 Shaws twenty-four patents over about the same number of years were always obtained
20 the same way. Shaw and Larson did crosses. They grew the plants. They studied them,
21 developed them, and tracked them over years. When enough time had passed, and sufficient data
22 was generated to establish that they had developed a new and unique variety, they formally
23 disclosed the variety to UC, with accompanying data, signed assignments, and went back to work.
24 The only exceptionthe only one in almost 30 yearswas the CSG application at issue
25 in this case. For this one application, UC demanded assignment with a blank form. It filed the
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The recent agreement remained secret during discovery. UC never disclosed its
27 existence. It took a California Public Records Act, Cal. Court Code section 6250 et seq., request
to the CSC to dislodge a document disclosing the secret agreement, although certainly other
28 documents still remain in UCs files that relate to it. See attached Exhibit A (Trial Ex. 796).
CBC, SHAW & LARSONS TRIAL BRIEF
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1 application for 168 varieties, some of which were only in their third year of evaluation. It filed
2 the application with summary data, but nowhere near the kind of data needed to patent each
3 variety. It turned to a new law firm, one that had not done plant patent work for UC over the last
4 decades, and who, it turned out, was UCs counsel in the CSC litigation.
5 This was no series of coincidences. The filing of the CSG application in its unusual, and
6 improper, form was done for one reason to create a claim for ownership over the CSG, prevent
7 Shaw and CBC from working with it, and satisfy the CSC and its proprietary breeding backers
8 that did not want competition from the previously successful UC program.
9 The bad faith conduct continued. UC and its lawyers induced Shaw to leave plants at UC,
10 allegedly required for the [CSC] litigation. They falsely asserted that UC then, before any
11 assignment, legally owned all Shaws and Larsons rights in their inventions. They continued to
12 prosecute the sham patent application, which, years later, still languishes in the Patent Office.
13 And, as was revealed in discovery, even after expressly promising to protect Shaws and Larsons
14 rights in the plants known as Transition Cultivars, UCs new breeder destroyed hundreds of
15 them, their unique qualities lost forever.
16 UCs Conduct Damages CBC UCs misconduct caused CBC significant harm. Shaw
17 has a decades-long, proven track record in breeding new and valuable strawberry varieties,
18 working with material he has developed, nurtured and carefully evaluated over several years.
19 Now, CBC cannot work with CSG because UC filed a sham patent application, and cannot work
20 with the IP in the TCs because UC has destroyed the sole embodiment of much of it and insists on
21 keeping the rest away from CBC. The Court has held that Shaw and Larson have no rights to this
22 plant material in UCs possession. But Shaw and Larson had exercisable IP rights to the material
23 in the Doctors possession when they were told by the University they had no IP rights in the
24 plants they invented and must transfer the material to the University, which they did under protest.
25 As a result, CBC cannot move forward with the benefit of Shaws and Larsons IP rights, and the
26 lost opportunity to build another, meaningful strawberry breeding program has caused significant
27 damages to CBC, estimated by CBCs expert in the tens of millions.
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CBC, SHAW & LARSONS TRIAL BRIEF
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2 IV. CONCLUSION
3 CBC, Shaw and Larson look forward to the upcoming Pretrial Conference and to the
4 Courts guidance to the parties, to further shape this case for an efficient, fair jury trial.
5 Dated: May 1, 2017 Respectfully submitted,
6 Jones Day
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